Imagine you’re at an airport. You’ve gone through security, and you’re ready to check your luggage. As you heft your bag and pass it to the handler, you realize their employee badge reads, “Senior Executive.”
This was the case in 2022 when the Head of Operations for Australian airline Qantas asked for volunteers—including senior and executive staff—to work at the company’s airports in Sydney and Melbourne.
Qantas, which lost billions of dollars in revenue due to the pandemic, laid off many of its ground staff, causing a labor shortage that left the company unable to meet the needs of its airports.
Due to the tight labor market combined with a flu and COVID-19 spike, the airline resorted to asking all of its employees—including those at the top of the corporate hierarchy—to help fill the gaps in its workforce for three or five days a week, in shifts of four or six hours a day.
Although more people have resumed air travel since the start of the pandemic, the labor market remains tight. Eighty percent of HR professionals say that the labor shortage is a top concern for their companies in 2023. Talent retention has also decreased as rising inflation forces many to consider new opportunities to help them pay for the increasing cost of essentials.
These conditions are forcing companies to get creative to achieve their internal goals—including engaging in a practice that is becoming widely known as “quiet hiring.”
What Is Quiet Hiring?
Normally, when a business sets out to hire new talent, it does so to backfill vacant roles, create new roles to help the company grow, or address an acute, immediate need.
Emily Rose McRae, head of Gartner’s future of work research team since 2019, defines “quiet hiring” as the act of filling skills gaps without actually hiring new employees, often by reassigning current employees from their normal roles to other positions that are essential for the current needs of the business.
“The talent shortage that we talked about throughout 2022 hasn’t gone away,” McRae said. “So, you’re in a situation where it’s harder to get a headcount, and you have a desperate need for talent.”
Types of Quiet Hiring
According to McRae:
- Internal quiet hiring is when an organization encourages existing employees to pivot into different roles, leveraging skills they already possess to address a temporary project or growth need.
- Example: Qantas asking employees to volunteer to work as bag handlers
- External quiet hiring is when companies hire short-term contractors to help their company grow or solve a temporary problem.
The Benefits of Quiet Hiring
Quiet hiring allows businesses to quickly address skill gaps in their workforce by reassigning or encouraging their current employees to take on new roles temporarily or by hiring short-term contractors to address the needs of the business.
It also offers career development opportunities for your current employees, which can help boost retention. Ninety-one percent of millennial professionals think career progression is a top priority when it comes to choosing which company to work for.
Quiet hiring allows employers to pull two weeds with one yank—giving upskilling opportunities to employees while addressing temporary talent shortfalls.
The Downsides of Quiet Hiring
When you engage in “internal” quiet hiring, it leaves a vacancy in your workforce as talent pivots to new roles, potentially affecting productivity and causing stress on your team.
Internal quiet hiring also runs the risk of making the employee who pivots into a new role feel like their old job wasn’t “as valuable” as the task they’re being asked to complete.
“External” quiet hiring allows you to source the skills and labor you need. However, the long-term benefit to your company is limited because contractors won’t be there for the long haul, growing into their role in your organization as a permanent employee would.
Relying too much on contractors can also open you up to certain risks. Contractor misclassification leads to fines, employee entitlement back pay, back taxes, and legal penalties—not to mention reputational damage.
The degree of risk and the severity of penalties can vary depending on the talent’s country of origin—a factor you must consider carefully when engaging with international contractors.
Why Is Quiet Hiring Happening?
The effects of high inflation and the “Great Resignation”—or the “Great Re-Evaluation,” depending on who you ask—have caused talent to re-evaluate their priorities, leading to low retention and high turnover. And because there are currently more jobs than there is talent to fill them, talent has more options for where to work than before.
A survey of Chief Human Resource Officers (CHROs) at Global 1000 organizations showed that talent attraction and retention is the number one concern for 75% of CHRO respondents.
Despite all-time high employee engagement and a surge of job opportunities, over half of global employees reported they were actively or passively job-seeking in 2022, according to Gallup's 2023 State of the Global Workplace report.
Sixty-one percent of CEOs also say that hiring challenges are a major concern for their ability to operate effectively at full capacity, according to a report by Vistage. Despite this, 60% of CEOs plan to increase headcount in the year ahead, and only 7% plan to reduce headcount.
How to Deal With the Labor Shortage
Although “quiet hiring” can temporarily assuage your company’s pain points, it’s still a temporary solution to the ongoing, worldwide problem of talent shortage. At the end of the day, business leaders need talent with the necessary skills to hit their growth targets, which means standing out in a very competitive crowd.
Of course, that can be a tall ask in today's talent market. Companies across the globe are pulling out all the stops to overcome the talent shortage to draw top talent to their organizations. Eighty-four percent of CEOs report that their organizations are increasing wages and compensation in 2023 to attract and compete for talent. Forty-four percent report they will offer hiring bonuses, 68% will offer flexible hours and scheduling, and 60% will offer remote work options.
Overcome the Labor Shortage in 2023 with Global Hiring
While quiet hiring can temporarily address issues facing your company related to the talent shortage, it requires you to choose between different priorities—potentially forcing you to put some projects on hold or scrap them altogether. Hiring permanent employees, offering them competitive compensation, and granting them the flexibility they want lead to better long-term outcomes for your business.
Another way employers can overcome the talent shortage is to broaden their search into global markets. Hiring remote talent across borders expands your hiring pool beyond your own postcode, making it far easier to find someone to fill open roles within your budget.
HR managers have historically avoided global hiring due to the difficult process of setting up entities. But that's no longer the only option. Working with a partner can make the entire process easier and more cost-effective.
Case Study: Materialize
Materialize, which helps businesses source actionable intelligence from streaming data, needed to hire specialized talent to meet growing global demand for its SaaS platform.
The U.S.-based company identified talent in Spain and Germany but lacked the previously established entities it would need to hire and onboard them quickly.
Materialize Chief of Staff Charles Horner decided working with an employer of record (EOR) could help. An EOR is a third-party company that streamlines hiring, payroll, compliance, benefits administration, and more for organizations seeking to hire global talent, allowing them to source and hire the talent they need quickly.
After vetting various EOR providers, Horner partnered with Velocity Global, whose dedicated regional experts in Spain, Germany, and the U.S. enabled Materialize to quickly and compliantly hire their ideal talent while ensuring they felt supported and cared for every step of the way.
Rise Above the Talent Shortage and Build Your Dream Team
Quiet hiring may be an effective short-term solution for some, but it leaves a vacancy in your workforce and can make employees feel less valued, as well as cause stress and disruptions to the productivity of your workforce.
Don’t let a tough talent market and economic uncertainty keep you from attracting and hiring the people you need.
To learn more about how to deal with the labor shortage, download our guide, Rise Above Economic Uncertainty.
